We can use the Relative Strength Index (RSI) in a myriad of ways, but my favorite way is to use it as a straight forward barometer of strength. And one sector ETF that has continued to trend higher over the past two years is the Biotech Sector ETF (IBB). But I noticed something recently with its RSI that I think is important for traders to note. Let me explain.
For two years now, every single rally in the biotech group has brought the RSI to or above the ‘overbought’ 70 level. Now for the first time in years, the upside momentum is weak and can barely crack the 60 level.
IBB Biotech Sector ETF – RSI Weakness?
This is a sign of a weakening rally and warns of impending weakness in the Biotech group.
It’s probably not a bad idea to check your current biotech stock holdings and look to book some big wins and trim some fat until the sector re-energizes.
Thanks for reading!
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No positions in any mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.